Kondos and Secretary, Department of Family and Community Services
[2005] AATA 1229
•14 December 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 1229
ADMINISTRATIVE APPEALS TRIBUNAL )
) No A2005/198
GENERAL ADMINISTRATIVE DIVISION ) Re NICHOLAS KONDOS Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Mr S. Webb, Member Date14 December 2005
PlaceCanberra
Decision The decision under review is set aside and in substitution thereof the Tribunal decides that the period in which Mr Kondos must lodge an application for registration under the Pension Bonus Scheme is extended to 31 March 2005 and his registration under that Scheme takes effect on 9 January 2000.
The matter is remitted to the Respondent to determine issues concerning the lodgement of a claim by Mr Kondos and the payability of any such claim...............................................
Mr S. Webb, Member
CATCHWORDS
SOCIAL SECURITY - Age Pension Deferral Bonus Scheme - requirement for application for registration within specified period - late lodgement of application for registration - limited discretion to extend period for lodgement of application - meaning of 'pre-application period', 'accruing member' and 'overall accruing period' - applicable work test and test periods - discretion to determine the date of effect of a registration during an extended lodgement period – factors to be considered in relation to discretion – onus on Applicant - no jurisdiction to determine payability of Pension Bonus in absence of claim – extension of time justified – decision under review set aside
Social Security Act 1991 ss 92A, 92B, 92C, 92H, 92N 92P, 92Q, 92R, 92T, 92U, 92W, 93E, 93W, 93UA, 1126AC
Social Security (Administration) Act 1999, ss 8, 11, 17, 36
Drake v Minister of Immigration and Ethnic Affairs (1979) 24 ALR 577
Secretary, Department of Social Security v Alvarro (1994) 50 FCR 213
West Australian Field and Game Association v Pearce (1992) 27 ALD 38
Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541
Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344
REASONS FOR DECISION
14 December 2005 Mr S. Webb, Member 1. Nicholas Kondos has been denied a Pension Bonus under the Pension Bonus Scheme (“PBS”) by successive decisions of delegates of the Respondent Secretary as affirmed by the Social Security Appeals Tribunal (“SSAT”). Mr Kondos worked beyond retiring age and did not claim an Age Pension for a further four years. He was not informed about the PBS when he claimed Age Pension. Subsequently, he found out about the PBS and attempted to register for that scheme, claiming ignorance and consequent error in his Age Pension claim form. In response, delegates of the Respondent Secretary, and subsequently, the SSAT, decided that he was not entitled to a Pension Bonus under the PBS as he had neither registered for nor claimed a Pension Bonus before receiving payment of his Age Pension (see T2, T14, T15, T16 and T17).
issue for determination
2. The issue for determination in these proceedings is whether the decision to deny Mr Kondos a Pension Bonus under the PBS was the correct or preferable decision in the circumstances.
3. At the outset, it is necessary to record that Mr Kondos has not at any stage lodged a Pension Bonus claim form for payment under the PBS.
4. Payment of a Pension Bonus cannot be made without such claim being made. To the extent that the primary decision purported to determine issues of payability of a Pension Bonus to Mr Kondos it was invalid. While that does not negative this review, the issue of payability is not properly before this Tribunal for determination.
5. The powers of this Tribunal in these proceedings are those of the original decision maker (Drake v Minister of Immigration and Ethnic Affairs (1979) 24 ALR 577). If the primary decision is not valid in all respects that does not vitiate the Tribunal’s power to review a reviewable decision properly placed before it (Secretary, Department of Social Security v Alvaro (1994) 50 FCR 213). In relation to which the Tribunal is required to determine the correct or preferable decision on the material that is placed before it.
factual context
6. Considering all of the materials placed before me and the oral evidence of Mr Kondos, I make the following uncontroversial findings of fact.
7. Mr Kondos was born on 9 January 1935. He is of Greek origin and his native language is Greek (during the hearing in this matter the Tribunal was assisted by an interpreter in the Greek language). Mr Kondos qualified for the Age Pension on 9 January 2000 (his 65th birthday) as an Australian resident. However, he did not lodge a claim for payment of Age Pension at that time. Nor did he lodge an application for registration under the PBS.
8. On and after 9 January 2000 Mr Kondos and his wife continued to operate their business, Kondos Snack Foods. Mr Kondos gave evidence that he worked 50 to 60 hours each week in the business, packing and distributing snack foods, from 9 January 2000 until he retired in or about April 2004. The Respondent did not challenge Mr Kondos’s evidence in this regard, and I accept it.
9. On or about 26 June 2003 Mr Kondos gifted an asset to his daughters. He estimated the value of that asset, a warehouse, to be $340,000 (T13 folio 39). Subsequently, the value of this asset was taken into account by Centrelink officers when calculating the rate of Age Pension that was payable to Mr Kondos (T8 folio 28).
10. On 18 May 2004 Mr Kondos informed Centrelink of his intention to claim Age Pension (T3 folios 8-10). He asserts that he did not know anything about the PBS at the time and was given no information about it in discussions with Centrelink staff about claiming the Age Pension or subsequently in discussions with a financial adviser. That evidence was not challenged and I accept it. The Respondent contended that the PBS has been widely publicised since it came into effect in 1998. However, no evidence was adduced to support that contention and no published materials that may have been accessible to Mr Kondos were placed before me.
11. Mr Kondos lodged an Age Pension claim form on 4 June 2004 (T6) and Age Pension was paid from 2 June 2004 (T7 folios 25-27).
12. The Age Pension claim form Mr Kondos completed contains the following questions: “Are you a registered member of the Pension Bonus Scheme?” and “Do you wish to REGISTER for the Pension Bonus Scheme?”. Mr Kondos ticked ‘No’ in answer to both questions (T6 folio 20).
13. Mr Kondos gave evidence that an interpreter in the Greek language assisted him to complete the form as he has difficulty reading and writing English. He stated that the interpreter completed the form in consultation with him and he signed it. Mr Kondos was adamant that the interpreter did not provide him with any information or explanation about the PBS or the significance of the questions concerning registration for the PBS in the Age Pension claim form. The Respondent neither challenged Mr Kondos’s evidence nor sought to assert that he was provided with relevant information about the PBS. I accept his evidence and find that he was not provided with information about the PBS or any potential entitlement he may have had under that scheme in discussions with Centrelink officers or the interpreter when completing and lodging his claim for Age Pension on 4 June 2004.
14. I accept that Mr Kondos subsequently heard about the PBS from a friend and contacted Centrelink on 16 February 2005 with the intention of testing his entitlement to a Pension Bonus (T9 folio 29). On 9 March 2005 Mr Kondos wrote to Centrelink and stated (T10 folio 30):
“After recently filling out a pension claim form, it has come to my attention that I incorrectly and unknowingly indicated that I was not interested in applying for a claim of a Bonus. I would like to indicate that I Nick Kondos, am interested in such a scheme, and ask that you disregard this error in my form…”
Consequently, on 18 March 2005, Centrelink provided him with a PBS registration form (T12), which he duly completed and lodged on 31 March 2005 (T13).
15. On or about 5 April 2005 a delegate of the Respondent decided “…rejected pdb [pension deferred bonus] – client not registered and was paid age pension payment” (T14 and T16). On 6 May 2005 that decision was reconsidered and affirmed by an Authorised Review Officer, who stated (T17 folio 49):
“There is discretion in section 92H of the SSA to accept a late registration form which may be warranted in your case;
Your record shows that it has been updated to show that you have been registered for PBS since lodging your registration form;
However, as you have been granted Age Pension prior to the claim for PBS being lodged, you cannot be paid the PDB in accordance with section 92C of the SSA;
As such, the decision not to pay you the PDB from 9/1/2000 to 1/6/2004 is correct.”
16. The SSAT proceeded on the basis that the issue to be decided was “whether Mr Kondos can be paid the pension bonus” (T2 folio 4) and decided to affirm the operative decision (T2 folio 7).
legislation and law
17. This application rises for determination under the Social Security Act 1991 (“the SS Act”) and the Social Security (Administration) Act 1999 (“the Administration Act”).
18. Section 92A of the SS Act sets out a simplified outline of the PBS that is given substance by subsequent provisions (ss 92B to 93W inclusive). Section 17 of the Administration Act sets out special requirements attaching to claims for Pension Bonus (see also s 11 of the Administration Act). It is not necessary to set out all these provisions for present purposes.
19. Essentially, in order to be eligible for a Pension Bonus a person must register for membership of the PBS within the prescribed time (s 92H) and must satisfy the qualification criteria (s 92C). However, there is discretion in the Secretary to extend the period within which the person must lodge an application for registration (subs 92H(3)). The discretion is in two parts, the second being contingent upon the first. The first part is concerned with extension of the application period for registration and is subject to the terms of subs 92H(4). The second part is concerned with the date on which a registration application lodged within an extended period takes effect if the extension is granted.
20. While the terms of the discretion are broad, the exercise of the discretionary power so conferred is not unfettered. It is subject, in the first part, to the limits imposed by subs 92H(4), and otherwise may only be validly exercised on a reasonable basis that is fair and equitable for the purpose intended by the legislature (Malcolm CJ in West Australian Field and Game Association v Pearce (1992) 27 ALD 38 at 45-48). The onus is on the applicant to show that his case “…is a justifiable exception to the rule that the welfare of the State is best served by the limitation period…” and that “… the justice of the case requires that extension…” (McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 554). Relevant considerations may include but are not limited to matters such as whether the person has a reasonable explanation for the delay in making the application, any action taken by the person to inform the respondent of his or her intentions, any prejudice to the respondent, the relative merits of the application, any unsettling of other persons or established practices, and considerations of fairness between the applicant and other persons in a similar position and the public interest (Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 at 348-349).
consideration
21. Carefully considering the submissions of the parties, it is necessary to consider the steps that are to be taken in order to properly determine Mr Kondos’s case. As already noted, Mr Kondos has not lodged an application for payment of a Pension Bonus. The action he took was to lodge a late application for registration as a member of the PBS. Mr Kondos’s application for registration must be properly considered before any consideration can be given to issues of his qualification for a Pension Bonus, or whether such a bonus is payable in the circumstances.
22. The first step is to consider whether Mr Kondos has a sufficient case to justify exercising the discretion to extend the period in which he must make an application for registration. In the Respondent’s submission the limits imposed by subs 92H(4) on the exercise of that discretion are applicable in Mr Kondos’s circumstances and conclude the matter. For reasons that will appear, I do not agree.
discretion must not be exercised in certain circumstances
23. In the context of the statutory provisions of the PBS, subs 92H(4) has the effect of precluding the Secretary from deciding to extend the application period for registration in certain circumstances. The subsection is directive and conditional:
“92H(4) The Secretary must not make a decision to extend the period within which a person must lodge an application unless, if it were assumed that the person had been a member of the pension bonus scheme throughout the pre-application period:
(a) the person would have been a non-accruing member for all of the pre-application period; or
(b) both:(i) the person would have been an accruing member for some or all of the pre-application period; and
(ii) the person would have passed the work test for each test period that is applicable to the person.” (emphasis added)
24. The term ‘pre-application period’ is given meaning by subs 92H(5). In this case the pre-application period commenced on the date Mr Kondos qualified for Age Pension on his 65th birthday (9 January 2000) and finished on the date on which he lodged his application for registration (31 March 2005). I so find.
25. The term ‘accruing member’ is given meaning by s 92N of the SS Act. Relevantly, Mr Kondos would be an ‘accruing member’ during the pre-application period unless he is taken to have been a non-accruing member within the meaning of ss 92P or 92Q during that period. I am near satisfied that he is taken to have been a non-accruing member for part of the pre-application period because he was subject to a disposal preclusion period within the meaning of ss 92P and 93UA. Mr Kondos disposed of an asset to his daughters on or about 26 June 2003 and the value of that asset is included for assessment purposes pursuant to s 1126AC. It follows that he is subject to a disposal preclusion period for a period of five years commencing on 26 June 2003. That being so, he would have been a non-accruing member from 26 June 2003 to the date of his application on 31 March 2005. For the remaining period of the pre-application period, from 9 January 2000 to 25 June 2003, I am satisfied and find that he would have been an accruing member.
26. The term ‘test period’ is given meaning by subs 92H(6). For that purpose it is necessary to identify the ‘overall accruing period’, being that part of the pre-application period the person would have been an accruing member of the PBS if they were registered. In this case, Mr Kondos’s overall accruing period is from 9 January 2000 to 25 June 2003, a period in excess of 365 days. Applying paragraph 92H(6)(c), I am satisfied and find that the test periods that are applicable to Mr Kondos are:
9 January 2000 to 8 January 2001
9 January 2001 to 8 January 2002
9 January 2002 to 8 January 2003
9 January 2003 to 25 June 2003.
27. Would Mr Kondos have passed the ‘work test’ for each of these periods? The term ‘work test’ is given meaning by s 92U (applying to a full year) and s 92V (applying to a part year). In order to pass the work test, noting the compliance waiver set out at subs 92H(7), a person must satisfy the Secretary that he or she has gainfully worked at least 960 hours in each full year or an equivalent pro-rated number of hours for each part year of the person’s accruing membership.
28. Mr Kondos gave oral evidence, which was not contested, that he worked 50 to 60 hours per week in his business during each of those full years. The Respondent conceded that he would have passed the work test in the applicable full year test periods. I agree and so find. Accepting Mr Kondos’s evidence I am also satisfied, applying the formula set out at subs 92V(2), that Mr Kondos would have passed the work test for the part year to 25 June 2003.
29. I do not accept the Respondent’s submission that Mr Kondos is required to satisfy the work test for periods from 26 June 2003 to 31 March 2005 as I have found that that period is not part of the applicable ‘overall accruing period’ for the purposes of paragraph 92H(6)(a).
30. It follows that Mr Kondos is within the terms of both subparagraphs 92H(4)(b)(i) and (ii). I am satisfied, therefore, that the discretion to extend the period in which Mr Kondos must lodge an application for registration is not limited by the effects of subs 92H(4) in the circumstances.
is extending the application period justified?
31. It remains for Mr Kondos to persuade the Tribunal that it is appropriate and justified to exercise the discretion conferred by subs 92H(3) in the circumstances.
32. Mr Kondos was not represented in these proceedings and his case was simply put:
(a)he was not aware of the PBS when he qualified for and subsequently claimed Age Pension;
(b)he only became aware of the PBS when he was informed about it by a friend (after claiming Age Pension);
(c)before claiming Age Pension he contacted Centrelink for information and advice;
(d)he relied on the information he was given by Centrelink and a financial adviser, and was assisted in those discussions by the services of an interpreter;
(e)His Age Pension claim form was filled out by the interpreter and he signed it;
(f)he did not know and was not informed when completing his claim for Age Pension about the effect of ticking ‘No’ in response to questions about PBS;
(g)neither Centrelink, the financial adviser nor the interpreter informed him about the PBS or any possible entitlement under the PBS or any terms and conditions that may apply at that time;
(h)if he had known about the PBS at that time he would have ticked ‘Yes’ and would have lodged an application form as required;
(i)he informed Centrelink of his intentions in relation to the PBS as soon as he became aware of it;
(j)he did not claim Age Pension when he turned 65, even though he was qualified to do so, and continued to work, thereby saving the Government money;
(k)he has worked hard and paid taxes for more than 40 years in Australia without claiming any social security payments until retirement;
(l)he is only claiming what he would have been entitled to receive if he had been properly informed about the PBS by Centrelink either when he first qualified for Age Pension on 9 January 2000 or when he claimed Age Pension on 4 June 2004; and
(m)it is unfair to deny him a Pension Bonus in these circumstances.
33. I pause to note that Mr Kondos claimed compensation for defective administration in relation to this matter. For reasons that are known to the Respondent and are not clear to me, his claim was rejected. The Tribunal has no jurisdiction in relation to that matter.
34. In the Respondent’s submission, Mr Kondos informed Centrelink (in his Age Pension claim form) that he did not intend to register for the PBS. Centrelink acted on the information provided and paid him Age Pension, thereby, it was submitted, precluding him from subsequently claiming a Pension Bonus under the PBS. On that basis, the Respondent submitted, Mr Kondos’s application has no merit and ultimately must fail, thereby rendering any extension of time in which to lodge an application futile. As will appear, I do not agree.
35. It is to this issue of merit that consideration must now be given. Section 92C of the SS Act sets out the qualification criteria for a Pension Bonus. Those criteria require that for a person to be so qualified the person, inter alia, must start to receive an Age Pension at or after the time when a person makes a claim for the Pension Bonus and must not have received an Age Pension at any time before making such a claim (subs 92C (a) and (b)). Those criteria are reflected in the special requirements attaching to claims for a Pension Bonus set out at s 17 of the Administration Act, whereby a claim for Pension Bonus must be attached to and lodged with a proper claim for Age Pension by the person or must be made in accordance with an invitation by the Secretary. That latter provision (subs 17(3)) allows a claim for Pension Bonus to be made by a person after the lodgement of a claim for Age Pension, and presumably after the person has been granted Age Pension pursuant to subs 36(2) of the Administration Act, in certain circumstances. However, those circumstances do not apply in this case. The fact is Mr Kondos completed and lodged a claim for Age Pension that did require him to disclose whether he was registered or wished to be registered for a Pension Bonus, to which he responded negatively. It follows, therefore, that Mr Kondos cannot make a claim for Pension Bonus by invitation.
36. However, that does not resolve the matter. The question remains whether his claim for Age Pension was a ‘proper’ claim pursuant to subs 17(1)(a) of the Administration Act. The term ‘proper claim’ is not given specific meaning in the Administration Act. I note that by various provisions of the SS Act prior to the commencement of the Administration Act that term was given particular meanings. Those meanings were specifically related to particular pensions or allowances, such as the Age Pension or Youth Allowance for example, and were essentially concerned with the form and manner of lodgement of a claim, and residence requirements attaching thereto. On that basis, it would appear that the claim for Age Pension Mr Kondos lodged in June 2004 was a proper claim. However, his claim form contained incorrect information that Mr Kondos subsequently sought to change on the basis of new information being provided to him by a friend in relation to Pension Bonus. In Mr Kondos’s submission, the information in his claim form should be corrected and his entitlements assessed on that basis at the time of claim. He asserted that if he had been informed about the PBS when he was completing the claim form he would have provided correct information at that time and would not, subsequently, have been placed in the position of seeking to change information that was provided in ignorance of his entitlements.
37. Plainly, Mr Kondos must bear some responsibility for failing to enquire about the meaning of the questions in his Age Pension claim form concerning the PBS before completing and lodging that form. However, I note that Mr Kondos required and was provided with the services of an interpreter when consulting a financial adviser about Age Pension issues and that the interpreter completed the claim form in consultation with Mr Kondos. The reason being that Mr Kondos has difficulty reading and writing in the English language. I note that the Respondent did not call the interpreter to give evidence in these proceedings and accepted the evidence given by Mr Kondos.
38. Generally, the Respondent Secretary is obliged to administer the social security scheme in a manner that is consistent with the objects set out at s 8 of the Administration Act. Regard is to be had to the special needs of disadvantaged groups, the desirability of providing ready access to information and to the need to be responsive to linguistic diversity. It is within those broad parameters that the responsibilities and obligations of the Respondent in this matter must be considered.
39. I am not persuaded that Mr Kondos was provided with ready access to information about the PBS that was sufficient for him to properly complete his Age Pension claim form. Plainly on the evidence he was not. Nor am I persuaded by the Respondent’s submission that Mr Kondos would have had ready access to information about the PBS which was widely published in 1998 following commencement of the scheme or that he would have had ready access to information about the PBS that was published subsequently. No such publications were adduced in evidence before me and it is not clear to me that any were published in the Greek language.
40. The significance of the PBS information requested in the Age Pension claim form that Mr Kondos completed must be taken into account. That information was critical to any prospective entitlement to a Pension Bonus he may have had at that time. However, Mr Kondos was not informed of this. It is reasonable to expect the Respondent to provide such information in a timely and readily accessible manner, especially in circumstances in which Mr Kondos had asked for information about his entitlements in relation to the Age Pension in May 2004. The fact is no such information was provided.
41. I am persuaded to accept that Mr Kondos informed the Respondent of his desire to register for the PBS, without delay, on being informed about that scheme on or about 16 February 2005, a period of more than seven months after lodging his claim for Age Pension. I also accept that if had he known about the PBS requirements and the significance of his responses to questions on that subject in the Age Pension claim form he would have expressed his desire to register at that time in June 2004. In those circumstances, in all likelihood the Respondent would have dealt differently with his case.
42. In those circumstances, it seems to me, it is open for a decision maker to find that Mr Kondos’s Age Pension claim was not a proper claim, or, in the alternative, to find that it is reasonable to permit Mr Kondos to amend his Age Pension claim to properly reflect his intentions in relation to the PBS. In either case, it would be open for Mr Kondos to claim a Pension Bonus and, at least in the latter instance, to have that claim determined at the date of his claim for Age Pension in June 2004. I note that subs 36(2) of the Administration Act directs that the Secretary “must not determine the claim for pension bonus until the claim for age pension has been granted” where a person claims both a Pension Bonus and an Age Pension.
43. It follows that I must reject the Respondent’s submission that a claim for Pension Bonus by Mr Kondos would be doomed to fail on technical grounds and would, therefore, have no merit. It seems to me that Mr Kondos may yet pursue a claim for Pension Bonus with some prospect of success if the period in which he must lodge an application for registration is extended.
44. I accept that Mr Kondos has a reasonable explanation for the delay in making his application for registration under the PBS. I am satisfied that no prejudice of significance to the Respondent would flow from granting Mr Kondos an extension of time in which to apply for PBS registration. If there is disturbance of established practices those may be to the benefit of the administration of the PBS, at least to the extent that similar problems to those encountered by Mr Kondos may be avoided in the future. That, it seems to me, would be a desirable outcome that would not result in any unfairness to others in similar circumstances or be contrary to the public interest.
45. That being so I am satisfied that it is reasonable and appropriate to exercise the discretion to extend the period in which Mr Kondos must make his application for registration under the PBS. The period will be extended to the date on which he lodged his application: 31 March 2005. I am also satisfied that it is reasonable to determine that the date on which his registration as a member of the PBS should take effect is 9 January 2000: the day he qualified for Age Pension. It follows that the decision under review is set aside and substituted with a decision in these terms.
46. The matter is remitted to the Respondent to address issues concerning Mr Kondos making a claim for a Pension Bonus and, ultimately, to determine any such claim on its merits.
47. Finally, I feel compelled to observe that the circumstance in which Mr Kondos finds himself is substantially the result of failure by the Respondent to provide him with information in a timely manner that he required, albeit unknowingly, to properly complete his claim for Age Pension. Although Mr Kondos must accept some responsibility for his predicament, it is abundantly unfair to rely on the technical grounds advanced by the Respondent in this case to deny him a Pension Bonus to which, otherwise, he may be entitled. If, ultimately, it is determined that Mr Kondos cannot claim a Pension Bonus in strict compliance with the applicable sections of the SS Act and the Administration Act, neither of which provide an effective avenue of relief in such circumstances, it may be appropriate for the Respondent Secretary to reconsider the decision to deny Mr Kondos compensation for defective administration, or, in the alternative, to give consideration to the granting of an ex gratia payment. Those are not matters for me to determine, but, in the circumstances of this case, such attention may be justified.
I certify that the 47 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S. Webb, Member
Signed: .....................................................................................
AssociateDate of Hearing 21 November 2005
Date of Decision 14 December 2005
Representative of the Applicant Self Represented
Solicitor for the Respondent Susan Mantaring
Centrelink Legal Services Branch
0